Watch Out for Form W-2 Pitfalls

At the end of every year, most businesses go through the process of filling out a Form W-2 for each employee, which can make for a very stressful time. The pressure of knowing that even the smallest of mistakes can result in costly consequences can make business owners uneasy., by implementing a system of checks and balances within your business, you can ensure that forms are filled out correctly, which will protect your company from coming face-to-face with Form W-2 pitfalls.

Pitfalls you should watch out for when filling out Form W-2

When it comes to filling out Form W-2, you cannot simply print off the W-2 documents found on the IRS’ website. This document is an unofficial copy of Form W-2, and it is used for educational purposes only. Instead, you must reach out to the IRS and order official copies of the W-2 form.

Alternatively, you can purchase W-2 forms from authorized sellers, which are typically office supply stores. Just make sure that the forms you are buying have been approved by the IRS. Unofficial copies of this form will not be accepted or processed by the IRS.

Also, when purchasing Form W-2, ensure that the forms are printed for the relevant tax year. Not only do the years differ but the forms change annually.

After you fill out W-2 forms for your employees and prepare to mail the forms, place them in an envelope that does not require you to bend or fold the documents. They must be mailed — without staples — in their original form.

When you finish filling out a Form W-2 document for each of your employees, do not send the completed forms to the IRS. These forms must be mailed to the Social Security Administration, and you need to mail them by January 31.

Formatting errors to keep an eye out for 

When entering dollar amounts, make sure you use decimals and cents. In other words, do not round up. Only write with black ink to ensure that your paperwork can be scanned after arriving at its destination.

When filling out the forms, make sure you print the letters or words in a legible size. Don’t worry about adding dollar signs to monetary values, but take a moment to double-check that you correctly input the information on each form.

For instance, when filling in the boxes for your employees’ Social Security numbers, you must write the correct string of numbers for each employee. Otherwise, serious issues could arise, so proofreading your inputs and making sure they are accurate the first time around is key.

Potential errors to be mindful of

When filling out Form W-2s for your employees, make sure you use their legal names. This is imperative because it is a requirement that the information on W-2 forms be identical to the information printed on employees’ Social Security cards.

It’s also important to make sure you only check the boxes that are relevant to each employee. For example, placing a checkmark in the retirement plan box — or Box 13 — for an employee that this does not apply to can pose a problem at a later point in time. So be as diligent as possible when filling out W-2 forms for each of your employees. Give equal attention to each form, and do not rush through the process.

In terms of Box 12, mistakes are easy to make because you’re working with various codes. These are used to report various compensation values and benefits amounts. You’ll need to make sure that the proper codes are entered in this box. While the goal is to minimize the odds of making a mistake, corrections can be made if you incorrectly input a code. If you need to correct an error, refer to the instructions for Form W-2.

Ensure that the name and address that you’re using for your business are identical across all forms — including but not limited to Form W-2. Do your due diligence to ensure that the address you include for each employee is the same address where said employee receives mail. Using an address that differs from where your employee receives mail can cause issues.

How to correct Form W-2 errors

If you need to correct an error that you made on a W-2 form, make use of Form W-2c. This form will assist you with the process of adjusting information and submitting the right data.

You might run into situations where expensive Form W-2 penalties are imposed on you. So, even though year-end processing can be exhausting, try to manage the stress and be proactive about your situation. By doing so, you can lower your odds of facing even more stress stemming from errors that go unaddressed.

One way of minimizing the chances of accruing costly fees is by using a centralized database. That way, you’ll enter information only once, syncing data between payroll, HR, attendance, and benefits. You’ll be more assured that the data is accurate and stored securely.

The best way to submit your W-2 forms is electronically. You can make use of the SSA’s Business Services website to do so. However, just know that if you have fewer than 250 forms to submit, you can choose to send them as paper forms in the mail instead of online. If you have any questions, feel free to contact tax professionals for personalized advice and insight into your options.


If you have any questions about these topics or others, please get in touch with one of our experts.

At Vrakas CPAs + Advisors, we strive to take financial worry off business owners’ plates so they can concentrate on running their businesses, serving their customers, and staying ahead of their competition.

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